Code Blue For TANF Emergency Contingency Fund

Back in March, I wrote about the need to extend the TANF Emergency Contingency Fund. It seemed at the time that the extension stood a good chance of passing as part of the then-latest version of the jobs/tax break extender bill — the American Jobs and Tax Loopholes Closing Act (H.R. 4213).

The House had twice passed an extension — once in March as part of the Small Business Jobs and Infrastructure Act (H.R. 4849) and again in May as part of H.R. 4213. But the small business bill is still hung up in the Senate. And the big jobs/tax break bill was ultimately whittled down to just a temporary extension of expanded unemployment benefits.

So here we are nearing the third week of September, with the Fund due to expire at the end of the month.

Republicans seem dead set against more stimulus spending. The Obama administration seems reluctant to step up to the plate, though Jared Bernstein, the Vice President’s Chief Economic Advisor, has blogged in support of an extension.

Hard to know whether the Democratic leadership in Congress will tee up the extension again or focus on high-stakes fights, e.g., the expiring Bush tax cuts, the energy/oil spill legislation, must-pass appropriations and maybe (given the egg recall) the long-pending bill to strengthen the federal food safety system.

Some of the major liberal research and advocacy organizations are trying to get the extension on the agenda — notably, CLASP, the Center on Budget and Policy Priorities and the Center for American Progress. But this is not a typical liberals versus conservatives issue.

Kevin Hassett, an economist at the quite conservative American Enterprise Institute, told the Senate Finance Committee that a major expansion of at least the subsidized employment provisions of the Fund would be a good idea, if focused “as much as possible” on private-sector jobs.

Beyond the Beltway, the bipartisan National Governors Association, National Conference of State Legislators and National Association of Counties have all come out in favor of an extension. Governor Haley Barbour of Mississippi, former Chairman of the Republican National Committee and now  Chairman of the Republican Governors Association, wants an extension too.

At least two West Coast nonprofits are drumming up grassroots support. One — Mission Neighborhood Centers — is a social services provider in San Francisco. The other — Internet Archives — offers free access to digitized books and other resources.

What’s brought these strange bedfellows together are the subsidized jobs programs that state and local agencies have created or expanded using Emergency Contingency Funds.

Those who follow this blog know that I’ve got serious reservations about the District’s use of these funds for its Summer Youth Employment Program. I’ve none at all about programs like San Francisco’s Jobs Now!, which has placed more than 3,600 unemployed and underemployed low-income parents in temporary jobs that build workplace skills and experience.

Or Mississippi’s STEPS, which also focuses on low-income parents and provides phased-out wage reimbursements intended to promote regular hires. Or Tennessee’s program, which has focused on a rural county where the unemployment rate shot up to 25% after an auto plant closed.

All-told, 36 states are operating subsidized jobs programs. A new CBPP brief indicates that they’ve placed more than 250,000 parents and teens.

Only four states will indefinitely continue their year-round programs at the current level if the Emergency Contingency Fund isn’t extended. Twelve will immediately terminate their programs, and three will continue operations only till their current funding runs out.

This will be bad for the many thousands of people who will be thrown out of work and for those who would be eligible for future placements. It will be bad for small businesses that have managed to stay afloat and, in some cases, expand because they’ve had subsidized workers. It will be bad for our economy as a whole, which, as we know, needs more consumer spending.

Close to home, the District could claim nearly $27.8 million if Congress passes the extension that’s been under consideration. It could use the funds for a broad range of purposes, including support and training for its TANF participants, homeless services for families and (dare one hope?) a robust, well-targeted subsidized jobs program.

So if you live outside the District, I urge you to sign my petition (a new one) in support of an extension of the Emergency Contingency Fund. And if you’re disenfranchised like me, please pass the word along.

TANF Emergency Fund Needs Emergency Extension

Last year’s economic stimulus package included a new Emergency Contingency Fund for states’ TANF programs. The fund was urgently needed because the regular contingency fund was expected to run out of money.

Under the regular contingency fund, states can receive more than their regular federal block grant when they can demonstrate economic need, as measured by their unemployment rates and food stamp enrollments. The federal government matches their increased expenditures based on the same formula that’s used for the federal Medicaid match.

The Emergency Contingency Fund provides an across-the-board 80% federal match for state spending increases on basic assistance such as cash and vouchers, subsidized employment and/or non-recurrent short-term benefits. Reimbursements for basic assistance are limited to states with increased caseloads. This ensures that states don’t take the money and, at the same time, tighten eligibility requirements and/or time limits.

Congress made up to $5 billion available, virtually ensuring that the fund wouldn’t run dry.

States can count a broad range of expenditures as short-term benefits, including certain types of assistance for non-TANF families. Spending and in-kind contributions by third parties can count toward a state’s maintenance of effort, i.e., the minimum amount the state has to spend to qualify for its federal funds.

This means that states have many options for qualifying. And, indeed, CLASP reports that, as of mid-February, 39 states and the District of Columbia had had their applications for grants from the Emergency Fund approved. None of them had received its maximum allocation, and additional applications were under review. So more support from the fund is possible.

But the fund will expire at the end of September unless Congress extends it. And it won’t do for Congress to wait until it approves the whole budget for the U.S. Department of Health and Human Services–especially not in these contentious times.

Most states begin their fiscal years on July 1, and all but a handful are facing budget shortfalls. As the Center on Budget and Policy Priorities explains, subsidized jobs programs generally involve six-month placements. So states will soon begin scaling back or phasing out their programs unless they know they’ll have funding after September 30. Other states have at least tentatively decided not to start programs because they’d have to be shut down so soon.

States may curtail their their TANF programs in other ways. CBPP warns of “harsh cutbacks” in basic cash assistance. Governor Schwartznegger is again threatening to abolish California’s program altogether. Governor Jan Brewer of Arizona proposes to reduce the number of months families can receive cash assistance.

Other safety net programs are at high risk too. They’ll be short on funds when unemployment rates will still be extraordinarily high and more people jobless long enough to have exhausted their unemployment benefits.

A range of cutbacks governors have already proposed are likely to offset whatever jobs the private sector creates. Funds for short-term help with expenses and longer-term cash assistance, education and training will be more needed than ever.

Like CBPP, CLASP is calling on Congress to extend the Emergency Fund now, with a bigger “overall pot.”

A key opportunity is a bill now pending in the Senate that would, among other things, extend expanded unemployment benefits and COBRA subsidies till the end of this year. It would also extend a vast number of expiring tax breaks, mostly for businesses. So, in some form, it’s almost certain to pass.

Senator John Kerry (D-MA) has introduced an amendment to fold a six-month extension of the Emergency Fund into this package. It would give the fund an additional $1.3 billion and add reimbursements for work subsidies lasting more than four months. The funding is less and the extension shorter than what the President proposed. But the amendment would avert the imminent crisis and buy time to build support.

Those of you who have Senators can urgent them to vote for the Emergency Fund extension. Just sign on to a letter I’ve created on Change.org.

You who live in the District can help by passing the word along. Recall that the Department of Human Services is counting on the Emergency Fund to sustain our severely-stressed homeless services.

CLASP expects a vote on the amendment next Tuesday, March 9. So time is of the essence here.